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Rajeev Suri is out at Nokia, Fortum's Pekka Lundmark takes over as CEO

The Finnish networks giant has faltered in the development of its crucial 5G technology.

Nokian väistyvä toimitusjohtaja Rajeev Suri ja tuleva toimitusjohtaja Pekka Lundmark.
Rajeev Suri will be replaced at the helm by Pekka Lundmark. Image: AOP / Lehtikuva

Nokia announced a change at the top on Monday, with Fortum CEO Pekka Lundmark to take over on 1 September. He replaces Rajeev Suri, who has led Nokia since 2014 and Nokia Siemens Networks since 2009.

The move comes as Nokia struggles with development of its crucial 5G mobile phone technology and faces a probe by Finland's financial watchdog into whether it tried to keep those problems secret – which Suri has denied.

Lundmark said he is "confident that [Nokia] is well-positioned for the 5G era".

“With the acquisition of Alcatel-Lucent behind us and the world of 5G in front of us, I am pleased that Pekka has agreed to join Nokia,” Nokia Board Chair Risto Siilasmaa said in a statement. Siilasmaa himself will be replaced this spring by Sari Baldauf, who hired Lundmark when she was chair of Fortum's board.

"Nokia will always be part of me"

Suri, 52, became CEO of Nokia Siemens Networks over a decade ago and of Nokia itself in 2014. Altogether the Indian-Singaporean worked for Nokia for 25 years.

"Nokia will always be part of me, and I want to thank everyone that I have worked with over the years for helping make Nokia a better place and me a better leader," Suri said in a statement.

Suri will remain on board as an advisor to the Nokia Board until the start of next year. He says that he "want[s] to do something different," but has not yet said what that might be.

Lundmark has led Fortum since 2015 after a stint at Konecranes. The 57-year-old engineer worked for Nokia throughout the 1990s, mostly in the US.

The appointment of Lundmark follows the terms of Suri and Canadian Stephen Elop (2010-13), the only non-Finns to lead Nokia since it was founded in Tampere in 1865.

Lundmark is leaving Finland's biggest energy company, the majority-state-owned Fortum, at a time when it faces pressure over its purchase of German energy giant Uniper and decision to push ahead with western Europe's only new coal plant, Datteln 4.

Profit warning, financial probe

Nokia, too, has faced headwinds in recent months.

Last October, Nokia issued a profit warning, saying it was having problems with the development of its long-awaited high-speed 5G technology, and that it would be slower and costlier than expected. The announcement was followed by a sharp drop in the firm's stock price.

In January, the Finnish Financial Supervisory Authority (Fiva) launched a preliminary investigation into the company's announcement and why it did not offer any hints about its problems earlier. Suri denied that the company had tried to keep its 5G troubles secret.

The delays came as the Finnish firm had been expected to benefit from restrictions placed on rival Huawei in Europe and the US over security concerns around future 5G networks.

"Worst performer in 5G tests"

In early February, Reuters reported that Europe's biggest teleoperator, Deutsche Telekom, had warned Nokia that it had to improve its products and service in order to win contracts to install DT’s 5G wireless networks in Europe. The news agency cited documents showing that DT "considered Nokia the worst performer among all suppliers in 5G tests and deployments".

Nokia and Fortum were among the most heavily traded shares on the Helsinki Stock Exchange after the opening bell on Monday. Nokia's share price started the day down by more than 5.5 percent but was up by around four percent by mid-morning. Fortum was down by around 3.8 percent but also rose into positive territory later.

Yle will livestream a Nokia press conference scheduled for 11am at its Espoo headquarters.

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